Cato Podcast Better Care for Billions Less: Fixing Medicaid’s Long-Term Care Incentives
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Dec 11, 2025 Stephen A. Moses, founder of the Center for Long-Term Care Reform, dives deep into Medicaid's long-term care issues. He reveals how asset sheltering by middle-class families shifts costs to taxpayers, driving up spending and compromising quality. Moses explains the flaws in estate recovery rules and the 'two Mercedes' rule that lets wealthier households qualify for Medicaid. He advocates for reforms to tighten eligibility, eliminate home equity exemptions, and introduce block grants to better control costs and improve access for the most vulnerable.
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How Moses Began Investigating Medicaid
- Stephen A. Moses discovered Medicaid's quirks while working at HHS in the Seattle regional office.
- Finding estate recoveries there led him to research how Medicaid treats middle‑class assets.
Loopholes Let The Middle Class Into Medicaid
- Medicaid's eligibility rules let middle‑class people qualify despite being designed for the poor.
- Exemptions like home equity, retirement accounts, and one car let wealth avoid the asset test.
Heirs' Incentives Drive Medicaid Planning
- Heirs and adult children have strong incentives to preserve parental wealth.
- That creates pressure to use legal Medicaid planning to shift costs to taxpayers.
